What is a Nash Equilibrium?

A Nash equilibrium is a common solution concept used in game theory for non-cooperative (i.e. players cannot work together or communicate), 2+ player games where given all other players' strategy choices, each player can do no better by changing his own strategy. 

Suppose there are two players, A and B, that can choose to play either strategy X or strategy Y.  Player A and Player B both playing strategy X (i.e. A,B: {X,X}) is a Nash Equilibrium if and only if neither player can increase her payoff by deviating to playing Y holding constant the other player's strategy at X.  Note, there can be multiple Nash Equilibria in a game.

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Answered by Raees C. Economics tutor

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